SOUTHCORP BACKS BRANDS TO CONTINUE RECOVERY

Published: 23 July, 2008

By Jack Hibberd

Southcorp's chief executive John Ballard unveiled much-improved financial results last week and promised more investment in brands (including a relaunch of Rosemount) and further cost cutting to restore shattered shareholder value. The UK business returned to profitability ahead of expectation', said Ballard, with the improved results due to reduced discounting'. Although volumes fell (I might add by design),' said Southcorp chairman Brian Finn, our case rates increase substantially on a similar mix of products... we're in a much better place than we were 18 months ago.' As well as a continuation of the recent streamlining of the production and distribution sides of the business, Ballard also unveiled plans to drive future profitable sales growth'. Key to this are an expansion of Lindeman's L' advertising campaign internationally and a relaunch of the Rosemount Estate brand. In the next six months,' said Ballard, the brand will have new labels and varietal wines in an attempt to strengthen the branding' and create more differentiation within key ranges across the portfolio'. He added that the brand will also benefit from a major television advertising campaign', although it is unclear if this will include the UK. Southcorp is also launching a new brand from New Zealand called Secret Stone, which Ballard described as a premium, niche boutique brand that will be small in volume terms but will address a number of strategic opportunities we have identified'. The first release will be a Sauvignon Blanc from 2003. Profit before tax and significant items reached AUS$176 million in the 2003/4 financial year, up 50% on the previous period, while profits after tax were AUS$42 million. The figures included further write-downs on its assets, which amount to around AUS$60 million.